Compliance
Modern Trusts & Filings: Simplified TFN Reporting for Closely-Held Trusts
Reporting trust beneficiary TFNs is changing: from 1 July 2026 closely-held trusts must include Tax File Numbers on their trust’s tax return, replacing separate notifications.
By NomadicTax Research Team • 5-8 min read • March 6, 2026
## What’s Changing for Trusts and Beneficiary TFNs
The Australian Treasury has released **draft legislation** that would change how **closely-held trusts** report the Tax File Numbers (TFNs) of beneficiaries who are **presently entitled** to trust income. Under the proposed rules, trustees will **no longer use a separate approved form**; instead, they must **report beneficiary TFNs in the trust’s income tax return statement of distribution**.([consult.treasury.gov.au](https://consult.treasury.gov.au/c2025-726341?utm_source=openai))
These changes aim to streamline reporting, **support prefill capabilities** at the ATO, and reduce compliance burden for trustees, beneficiaries, and tax agents.([consult.treasury.gov.au](https://consult.treasury.gov.au/c2025-726341?utm_source=openai))
## Timing & Status
- The **exposure draft legislation** is currently closed for submissions (closing 1 February 2026)([consult.treasury.gov.au](https://consult.treasury.gov.au/c2025-726341?utm_source=openai)).
- The proposed changes are set to apply from **1 July 2026** for income years commencing on or after that date.([au.andersen.com](https://au.andersen.com/wp-content/uploads/2026/02/AA_AU_AUSTRALIA_TAX_UPDATE_FEBRUARY_2026.pdf?utm_source=openai)).
## Who It Affects
- **Closely-held trusts** where beneficiaries have present entitlement to distributed trust income.
- **Trustees and tax agents** who prepare or assist with trust tax returns.
- Beneficiaries: to ensure their TFNs are quoted to the trust so that distributions can flow through correctly.
## Compliance Tips & Best Practices
- Ensure beneficiary TFNs are collected and accurate well ahead of trust distribution dates.
- Adjust internal trust-accounting systems to capture and transmit this information directly on the statement of distribution.
- Tax agents should prepare for software updates or form changes to trust tax return statement of distribution sections.
- Beneficiaries should verify tax statements from trustees for correct TFN reporting to avoid delays or lost deductions.
## Example Scenario
Alice is a trustee of a family trust with three beneficiaries each entitled to distributions of income. Under the current rules, the trust submits beneficiary TFNs using a separate form within a month after each quarter. Under the new rules, for the income year starting **1 July 2026**, Alice must report all beneficiary TFNs directly on the **statement of distribution** in the trust’s annual income tax return. No separate form. If a beneficiary’s TFN is missing, the trustee should make reasonable efforts to obtain it, or note guidance where incorrect or missing TFNs are handled. Ensuring TFN accuracy becomes critical.
## Bottom Line
This reform is part of the broader **Modernising Trust Administration Systems (MTAS)** initiative. It moves Australia’s trust tax compliance toward greater **electronic-based efficiencies** and **error reduction**, aligning trust income reporting with other income types that already support prefill. For trust structures with multiple beneficiaries or closely-held distributions, action now to ensure systems are ready for **1 July 2026** is essential.